Write-Down Guidance to Stay in ASC 323-10-35-31
The Financial Accounting Standards Board (“FASB”) has opted to keep the guidance related to write-downs of equity method investments in Accounting Standards Codification (ASC) 323-10-35-31, Investments — Equity Method and Joint Ventures – Overall – Subsequent Measurement in lieu of making the previously proposed amendments to its upcoming Financial Instrument standard. In regard to the guidance, ASC 323-10-35-31 applies the concept of a decrease in value that is deemed “other than temporary” for writing down equity investments believed at their historical rate. Although the write-down guidance remains intact, the issue has been met with disapproval by FASB members. Thomas Linsmeier. Read More.
U.S. Banks Still Using Poor Risk Models
After examining the 30 biggest U.S. financial institutions for its annual stress tests, the Federal Reserve is reporting that banks continue to rely on weak risk models. Announcing publicly last week their concerns on this year’s tests, it was discovered during the stress test were assumptions that were poorly documented or supported, had select validation checks, and notions made without knowing if they were possible. The Federal Reserve’s findings mirror an ongoing concern over banks’ reporting efforts. In January, global regulators encouraged the Financial Stability Board to make improved reporting a top priority. Additionally, Federal Reserve governor Daniel Tarullo has. Read More.
SEC Risk Alert and FAQs to Assist with Customer Sales of Securities
Serving as guidance for broker-dealers when involved with unregistered transactions on their customers’ behalf, the Securities and Exchange Commission (“SEC”) has issued a Risk Alert and accompanying FAQs. The Risk Alert discusses deficiencies identified by the SEC’s Office of Compliance Inspections and Examinations during its review of 22 broker-dealers that engage in microcap securities sales. In addition, the Risk Alert is supplemented with FAQs regarding customer sales of securities. Published by the SEC Division of Trading and Markets, the FAQs remind broker-dealers the requirements for abiding by the exemption. For the Risk Alert news release , visit the SEC website. Also be. Read More.
Task Force Report Says Bank Disclosures are Improving
In a report issued on Tuesday, the Enhanced Disclosure Task Force (“EDTF”) revealed that bank disclosures on possible risks are improving. Asked to provide details on their financial report disclosures and the degree to which they follow EDTF guidelines, banks improved in disclosing matters like the relationship between market risk and a bank’s balance sheet. It is also believed that efforts by banks and the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board’s (“IASB”) work on financial instruments accounting standards will assist ongoing changes to disclosures. Planned for release during first half of 2015, FASB has been working. Read More.
FASB Seeking 2015 Release of Financial Instruments Standards
As the Financial Accounting Standards Board (“FASB”; “the Board”) begins work on its scheduled financial instruments accounting project, the standard setter is aiming to release its first two updates during the early part of 2015. The first phase, classification and measurement of financial instruments, is projected to be finished in the next few weeks and sent back to FASB with a final draft. For its asset impairment phase, FASB is expected to make its final decisions next month and possibly give approval for preparing the last update in November. Before the final updates are approved and published next year, the. Read More.
FASB to Create Advisory Panel for Adoption of Asset Impairment Standard
Expected to issue its standard for recording loan losses next year, the Financial Accounting Standards Board (“FASB”) is creating an advisory panel to assist companies in the implementation of Proposed Accounting Standards Update No. 2012-260, Financial Instruments—Credit Losses (Subtopic 825-15). Responding to investors’ complaints about banks using the incurred-loss model for reporting losses during the global financial crisis, the standard will help disclose bad loans and securities, as well as adopt a current-expected-credit-loss (CECL) model. The new model will require banks to evaluate forthcoming losses on loans going bad and establish reserves based on such estimates. Commenting on the advisory. Read More.